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Exhibit
10.1.18
CHESAPEAKE ENERGY
CORPORATION
AMENDED AND RESTATED LONG
TERM INCENTIVE PLAN
1. PURPOSE
Section 1.1
Background . The original Long Term Incentive Plan was
approved by shareholders on June 10, 2005 (the “Initial
Plan”) and is being amended and restated to increase the
number of common shares authorized for issuance and to make other
changes as provided herein. The Initial Plan, as amended and
restated, is called the Plan.
Section 1.2
Purpose. This Long Term Incentive Plan is established by
Chesapeake Energy Corporation (the “Company”) to foster
and promote the sustained progress, growth and profitability of the
Company by:
(a) Attracting, retaining and
motivating Employees, Non-Employee Directors and
Consultants;
(b) allowing Employees,
Non-Employee Directors and Consultants to acquire a proprietary and
vested interest in the growth and performance of the
Company;
(c) providing incentives and
rewards to Employees, Non-Employee Directors and Consultants who
are in a position to contribute materially to the success and
long-term objectives of the Company; and
(d) aligning the financial
interests of Employees, Non-Employee Directors and Consultants with
those of the Company’s shareholders.
Section 1.3
Effective Date . The Initial Plan was effective as of
October 1, 2004, and the modifications provided for herein
will be effective on the date of Shareholder Approval. The
authority to issue Awards under the Plan will terminate on
September 30, 2014 and the remaining terms the Plan will
continue in effect thereafter until all matters relating to the
exercise and settlement of Awards and administration of the Plan
have been completed.
Section 1.4
Shareholder Approval . The Initial Plan received
Shareholder Approval on June 10, 2005 and June 9, 2006.
The modifications provided herein to the Initial Plan shall be
submitted for Shareholder Approval at the annual meeting of
shareholders to be held on June 8, 2007 or any adjournment
thereof. Unless and until such Shareholder Approval is obtained,
the Initial Plan will continue in effect unchanged by the
modification provided herein.
2.
DEFINITIONS
Section 2.1
“Affiliated Entity” means any partnership or
limited liability company in which a majority of voting power
thereof is owned or controlled, directly or indirectly, by the
Company or one or more of its Subsidiaries or Affiliated Entities
or a combination thereof.
Section 2.2
“Appreciation” means, with respect to a SAR (as
hereafter defined), the amount by which the Fair Market Value of a
share of Common Stock on the date of exercise of the SAR exceeds
either (i) the exercise price of the Option to which a tandem
SAR relates, in the case of a tandem SAR, or (ii) the Fair
Market Value of a share of Common Stock on the Date of Grant of the
SAR, in the case of a stand-alone SAR.
Section 2.3
“Award” means, individually or collectively, any
Option, SAR, Performance Share, Restricted Stock, Other Stock Award
or Cash Award granted under the Plan to an Eligible Person pursuant
to such terms, conditions, restrictions, and/or limitations, if
any, as the applicable Committee may establish by the Award
Agreement or otherwise.
Section 2.4
“Award Agreement” means any written or
electronic instrument that establishes the terms, conditions,
restrictions, and/or limitations applicable to an Award in addition
to those established by this Plan and by the Committee’s
exercise of its administrative powers.
Section 2.5
“Board” means the Board of Directors of the
Company.
Section 2.6
“Cash Award” means a cash bonus granted by the
Committee to a Participant pursuant to Section 8.
Section 2.7
“Change of Control” means the occurrence of any
of the following:
(i) the acquisition by any
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (A) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or
(B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”). For purposes of this Section 2.7 the
following acquisitions by a Person will not constitute a Change of
Control: (1) any acquisition directly from the Company;
(2) any acquisition by the Company; (3) any acquisition
by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company; or (4) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and
(C) of paragraph (iii) below;
(ii) the individuals who, as
of the date hereof, constitute the board of directors (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the board of directors. Any individual
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s shareholders, is
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board will be considered a member of the
Incumbent Board as of the date hereof, but any such individual
whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Incumbent Board will not be deemed a member of the Incumbent Board
as of the date hereof;
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(iii) the consummation of a
reorganization, merger, consolidation or sale or other disposition
of all or substantially all of the assets of the Company (a
“Business Combination”), unless following such Business
Combination: (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Person
(excluding any corporation resulting from such Business Combination
or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 30% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination and (C) at least a majority
of the members of the board of directors of the corporation
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) the approval by the
shareholders of the Company of a complete liquidation or
dissolution of the Company.
For Executive Officers, a
Change of Control means the occurrence of any of the foregoing
events; provided, however, if a change of control is defined in any
Executive Officer’s employment agreement with the Company, a
Change of Control with respect to any Award granted to such
Executive Officer under the Plan shall mean any of the events
described in the definition of change of control in such Executive
Officer’s employment agreement in force at the time of
determination.
Section 2.8
“Code” means the Internal Revenue Code of 1986,
as amended. Reference in the Plan to any Section of the Code shall
be deemed to include any amendments or successor provisions to such
Section and any regulations under such Section.
Section 2.9
“Committee” means the Compensation Committee of
the Board (or any successor committee) or any other committee
designated by the Board.
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Section 2.10
“Common Stock” means the common stock, par value
$.01 per share, of the Company and, after substitution, such other
stock as shall be substituted therefor as provided in
Section 3.3(b) of the Plan.
Section 2.11
“Consultant” means any person who is engaged by
the Company, a Subsidiary or an Affiliated Entity to render
consulting or advisory services.
Section 2.12
“Date of Grant” means the date on which the
grant of an Award is made by the Committee.
Section 2.13
“Disability” has the meaning set forth in
Section 409(A)(a)(2)(C) of the Code.
Section 2.14
“Eligible Person” means any Employee,
Non-Employee Director, or Consultant.
Section 2.15
“Employee” means any employee of the Company, a
Subsidiary or an Affiliated Entity or any person to whom an offer
of employment with the Company, a Subsidiary or an Affiliated
Entity is extended, as determined by the Committee.
Section 2.16
“Exchange Act” means the Securities Exchange Act
of 1934, as amended.
Section 2.17
“Executive Officer Participants” means
Participants who are subject to the provisions of Section 16
of the Exchange Act with respect to the Common Stock.
Section 2.18
“Fair Market Value” means, as of any day, the
closing price of the Common Stock on such day (or on the next
preceding business day, if such day is not a business day or if no
trading occurred on such day) as reported on the New York Stock
Exchange or on such other securities exchange or reporting system
as may be designated by the Committee. In the event that the price
of a share of Common Stock shall not be so reported, the Fair
Market Value of a share of Common Stock shall be determined by the
Committee in its absolute discretion.
Section 2.19
“Incentive Stock Option” means an Option within
the meaning of Section 422 of the Code.
Section 2.20
“Non-Executive Officer Participants” means
Participants who are not subject to the provisions of
Section 16 of the Exchange Act.
Section 2.21
“Non-Employee Director” shall have the meaning
set forth in Rule 16b-3, or any successor rule, promulgated under
Section 16 of the Exchange Act.
Section 2.22
“Nonqualified Stock Option” means an Option to
purchase shares of Common Stock which is not an Incentive Stock
Option within the meaning of Section 422(b) of the
Code.
Section 2.23
“Option” means an Incentive Stock Option or
Nonqualified Stock Option.
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Section 2.24
“Other Stock Award” means any right granted to a
Participant by the Committee under Section 7 of the
Plan.
Section 2.25
“Participant” means an Eligible Person to whom
an Award has been granted by the Committee under the
Plan.
Section 2.26
“Performance Award” means any award of
Performance Shares granted by the Committee under Section 6 of
the Plan.
Section 2.27
“Performance Measures” means the Company’s
achievement of target levels of earnings per share, share price,
net income, cash flows, reserve additions or replacements,
production volume, finding costs, operating costs, overhead or
other costs, drilling results, acquisitions and divestitures, risk
management activities, return on equity, total or comparative
shareholder return, a combination of or interrelationship among any
of the foregoing, or other criteria, as determined by the
Committee.
Section 2.28
“Performance Share” means the Common Stock
subject to a Performance Award granted under Section 6 of the
Plan, which may be delivered to the Participant upon the
achievement of such performance goals during the Performance Period
as specified by the Committee.
Section 2.29
“Plan”“ means the Chesapeake Energy
Corporation Long Term Incentive Plan.
Section 2.30
“Restricted Stock” means the Common Stock issued
under Section 5 which is subject to any restrictions that the
Committee, in its discretion, may impose.
Section 2.31
“SAR” means a Stock Appreciation
Right.
Section 2.32
“Shareholder Approval” means approval by the
holders of a majority of the outstanding shares of Common Stock,
present or represented and entitled to vote at a meeting called for
such purposes.
Section 2.33
“Stock Appreciation Right” means a right,
granted under Section 4, to an amount in Common Stock equal to
any increase in the Fair Market Value of the Common Stock between
the date on which the Stock Appreciation Right is granted and the
date on which the right is exercised.
Section 2.34
“Subsidiary” shall have the same meaning set
forth in Section 424(f) of the Code.
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3.
ADMINISTRATION
Section 3.1
Administration of the Plan; the Committee . The Compensation
Committee shall have overall authority to administer the Plan. The
Board may designate another committee or committees to administer
the Plan with respect to Non-Executive Officer Participants,
subject to any terms or conditions established by the Committee.
Hereafter, “Committee” shall mean the Compensation
Committee, except when used in reference to Awards granted to
Non-Executive Officer Participants, “Committee shall mean any
applicable committee designated by the Board.
Unless otherwise provided in
the bylaws of the Company or resolutions adopted from time to time
by the Board establishing the Committee, the Board may from time to
time remove members from, or add members to, the Committee.
Vacancies on the Committee, however caused, shall be filled by the
Board. The Committee shall hold meetings at such times and places
as it may determine. A majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present shall be the valid acts of the
Committee. Any action which may be taken at a meeting of the
Committee may be taken without a meeting if all the members of the
Committee consent to the action in writing. Although the Committee
is generally responsible for the administration of the Plan, the
Board in its sole discretion may take any action under the Plan
that would otherwise be the responsibility of the Committee, except
as such action pertains to the administration of Awards to
Non-Employee Directors.
Subject to the provisions of
the Plan, the Committee shall have the authority to:
(a) Select the Eligible
Persons to participate in the Plan.
(b) Determine the time or
times when Awards will be granted.
(c) Determine the form of
Award, the number of shares of Common Stock subject to any Award,
all the terms, conditions (including performance requirements),
restrictions and/or limitations, if any, of an Award, including the
time and conditions of exercise or vesting, and the terms of any
Award Agreement, which may include the waiver or amendment of prior
terms and conditions or acceleration of the vesting or exercise of
an Award under certain circumstances determined by the Committee
(subject to Section 10.2 of the Plan). However, nothing in
this Section 3.1 shall be construed to permit the repricing of
any outstanding Award in violation of Section 4.3.
(d) Determine whether Awards
will be granted singly or in combination.
(e) Determine whether, to
what extent and under what circumstances Awards may be settled in
cash or Common Stock.
(f) Determine whether any
conditions applicable to an Award have been met and whether an
Award will be paid at the end of a Performance Period.
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(g) Employ attorneys,
consultants, accountants and other advisors as deemed necessary or
appropriate by the Committee.
(h) Take any and all other
action it deems necessary or advisable for the proper operation or
administration of the Plan.
Section 3.2
Committee to Make Rules and Interpret Plan . The Committee
in its sole discretion shall have the authority, subject to the
provisions of the Plan, to establish, adopt, or revise such rules
and regulations and to make all such determinations relating to the
Plan as it may deem necessary or advisable for the administration
of the Plan. The Committee’s interpretation of the Plan or
any Awards granted pursuant hereto and all decisions and
determinations by the Committee with respect to the Plan shall be
final, binding, and conclusive on all parties, unless otherwise
determined by the Board.
Section 3.3
Shares Subject to the Plan . Subject to adjustment as
provided in paragraph (b) below and subject to
Section 3.4, the aggregate number of shares of Common Stock
which are available for Awards under the Plan will not exceed
seventeen (17) million shares. Any of the authorized shares of
Common Stock may be used for any of the types of Awards described
in the Plan, except that no more than 3,000,000 shares of Common
Stock may be issued pursuant to Incentive Stock Options. Common
Stock delivered pursuant to an Award under the Plan may consist, in
whole or in part, of authorized and unissued shares or treasury
shares. The Committee, in its sole discretion, shall determine the
manner in which fractional shares arising under this Plan are
treated. Additional restrictions or adjustments with respect to
shares subject to the Plan are as follows:
(a) Subject to
(b) below, the aggregate number of shares of Common Stock
pursuant to Options and SARs granted to any Employee or
Non-Employee Director in any calendar year under this Plan may not
exceed 750,000 shares and the aggregate number of shares of Common
Stock pursuant to Restricted Stock, Performance Awards and Other
Stock Awards granted to any Employee or Non-Employee Director in
any calendar year may not exceed 750,000 shares.
(b) In the event that the
shares of Common Stock, as presently constituted, shall be changed
into or exchanged for a different number or kind or shares of stock
or other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization,
reclassification, stock split, combination of shares or other
corporate event of similar nature), or if the number of such shares
of Common Stock shall be increased through the payment of a stock
dividend, then there shall be substituted for or added to each
share available under and subject to the Plan as provided herein,
the number and kind of shares of stock or other securities into
which each outstanding share of Common Stock shall be so changed or
for which each such share shall be exchanged or to which
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